Lufthansa said business had developed strongly in recent months with all its carriers meeting or exceeding expectations.

"If this continues in the coming months, we can be confident we will fulfill our expectations," management board member Stefan Lauer told reporters at an annual event.

Global airlines body International Air Transport Association (IATA) said earlier international passenger traffic growth continued in July, driven by recovering demand in Asia-Pacific, Latin America and the Middle East.

Growth in Europe has been stunted by slower economic recovery. Over the first seven months of this year, passenger demand grew by 3.6 percent, compared with double-digit growth rates in all other regions except for North America.

Lufthansa has so far been upbeat on industry recovery and has said it expects to meet market expectations for 2010 operating profit after demand for international air travel and cargo services picked up in the first half of the year.

"We are seeing load factors in our continental traffic from Frankfurt like we have never seen before," Lauer said, adding intercontinental traffic was also going well.

The German flagship carrier has benefited from accelerating recovery in its home market, where surging exports and a return to growth in consumer spending powered the economy to record economic expansion in the second quarter.

Lufthansa has also been a driving force in consolidation in Europe over the past few years.

It completed a shopping spree last year that added Austrian Airlines, bmi and Brussels Airlines to its stable of airlines as it battles rivals British Airways and Air France-KLM for European pole position.

Both Austrian and bmi are expected to post losses for 2010 but Lufthansa expects these to be offset by recovering demand at its main carrier as it restructures the purchased airlines.

Lauer also said he expects to see consolidation in the airline industry across continents within a few years.

"We haven't yet reached the end" of industry consolidation, he said.

So far, most airline mergers have been within continents, but consolidation has heated up over the past few years, and more airlines are forging intercontinental ties via partnerships and joint ventures.

Japan Airlines earlier this year agreed a joint venture with American Airlines on Pacific routes to tap revenue growth in a larger route network. (Reuters)